ASIC Ends Monitoring of HSBC for Retail Structured Products

The Australian Securities and Investments Commission (ASIC ASIC The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the The Australian Securities and Investments Commission (ASIC) is the prime regulator in Australia for corporate, markets, financial services, and consumer credit. It is empowered under the financial service laws to facilitate, regulate, and enforce Australian financial laws. The Australian Commission was set up and is administered under the Australian Securities and Investment Commission Act of 2001. ASIC was initially the Australian Securities Commission based on the 1989 ASC Act. Initially, the Read this Term) announced this Wednesday that it has completed its monitoring of HSBC Bank Australia Limited (HSBC) in regards to issues with its retail structured products.

On May 13, 2016, HSBC, which is one of the largest financial services companies in the world, entered into a court enforceable undertaking (EU) which ordered the bank to review and remediate clients who received advice that was potentially incorrect or deficient for its retail structured products between January of 2009 until March of 2013.

Today, however, ASIC has ended its surveillance of the bank to ensure it remains compliant and concluded the EU. According to the statement, the EU was a result of prior surveillance by ASIC, which saw HSBC cancel its offering of structured products to its retail clients in March 2013.

Before this, the bank provided retail structured products for Equities Equities Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling pa Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling pa Read this Term, indexes and more. A list of the complete structured products previously offered can be found here.

The Australian regulator’s surveillance found that between 2009 and 2013, for some structured products, HSBC advisors either obtained a small amount or no information at all about their clients’ personal circumstances such as their assets, liabilities, income or debts before they provided advice.

ASIC Found HSBC Advisors Provided Inappropriate Advice

Furthermore, from its surveillance, the watchdog also became concerned that in some instances, it was not clear if whether the advice given to clients was appropriate for their circumstances or needs.

The EU then required HSBC to review all the advice given to clients for its retail structured products. The bank was required to set up a remediation program in order to compensate any of its customers who lost money as a result of the inappropriate advice.

“As part of the remediation program, HSBC reviewed 510 structured product advice files and determined that 82 files (16%) contained inappropriate advice,” the statement said.

"HSBC also tested and reviewed advice provided on other product types such as superannuation, insurance, annuities and other investments, and identified much lower instances of inappropriate advice having been provided in those areas. HSBC has offered affected clients approximately $690,000 in compensation across all product types."